All you need to know about RTGS

Posted by neha sharma on May 26th, 2019

The rapid advances in technology have completely transformed the banking landscape and with it, the way the country transfers funds. With the popularity of the internet surging, online fund transfers have replaced traditional cheque transfers.

There are three main types of online fund transfers:

• National Electronic Fund Transfer (NEFT)
• Real Time Gross Settlement (RTGS)
• Immediate Payment Service (IMPS)

Out of these, IMPS is only available through the mobile banking application of bank. NEFT takes a couple of hours to settle depending on the batch which gets processed. RTGS on the other hand, happens immediately. It is the first immediate transfer service.

What is RTGS?

RTGS stands for Real Time Gross Settlement. What this means is that any amount transferred via RTGS happens immediately. It is instantly debited from the bank account of the transferor and gets immediately credited to the bank account of the transferee. Since the transfers happen in real time, it is called Real Time Gross Settlement.

The limit for an RTGS transfer is Rs. 2 lakhs. Each transaction has to be a minimum of Rs. 2 lakhs for an RTGS transfer to work. There is no maximum limit for RTGS fund transfers. The way NEFT works is that a number of instructions for fund transfers are collected together and settled in a batch at a fixed time slot every hour. On the other hand, an RTGS works on an individual instruction basis i.e each RTGS transfer is handled or settled individually.

RTGS is processed in the books of the Reserve Bank of India immediately. The bank has to transfer the funds to the recipient’s accounts within 30 minutes of the transaction getting settled.

Since RTGS transfer happens in the RBI’s books, there are certain timings for this transfer. RTGS transfer happens on weekdays i.e Monday to Friday from 8AM to 4:30PM. On Saturday, this transfer happens from 8AM to 2PM.

To proceed with an RTGS transfer, the remitter needs to provide the following information:

• Amount to be remitted
• Name of the payee
• Bank name of the payee
• Bank branch of the payee
• IFSC code of the bank branch
• Any information to go along with the transfer
• Mobile number of the transferor

Once this information is provided, the bank can proceed with the transfer.

The Reserve Bank has capped the charges that a bank can charge on RTGS transactions:

The charges for transfers between Rs. 2 lakhs and Rs. 5 lakhs are Rs. 25 with the applicable GST. For transfers above Rs. 5 lakhs, the bank charges are capped at Rs. 50 plus applicable GST. This is debited from the account making the transfer.

One important thing to remember before opting for an RTGS transfer is that RTGS gets settled directly in the books of the RBI. This means the transactions are immediate and final. They cannot be cancelled or reversed. However, in case there is any problem in crediting the amount to the recipient’s bank account, then the funds will be returned to the transferor. This happens in rare cases, otherwise, most RTGS transfers are final.